I'd Get Fired If I Told You This About Bad Credit Car Loans

As a former car salesman, sales manager and finance manager, I can tell you things about buying and selling cars that you've probably never even imagined happen on car lots. Here's another that you may find interesting.

When a customer is approved for a bad credit car loan, there are generally stipulations in the approval that the dealer must abide by in order to get the "deal funded". Getting the deal funded simply means getting paid for the car by the loan company, which holds the title for the borrower.

These stipulations are commonly known as...

Proof of residence required

Proof of income required

Previous year tax returns required

80% advance

90% advance

95% advance

There are others, but let's take a look at the "80% advance"...

Let's say that you're looking to buy a car that is priced at $10,000.00. Your loan application has been approved and there is a stipulation that the loan company will only provide an 80% advance. What this means is, that the loan company is only going to give the dealership $8,000.00 for the car. The other $2,000.00 (which you will be paying payments on) is the responsibility of the dealer. This means that the dealer is telling you that he's selling you the car at $10,000.00, but in reality, he's only getting paid 80% of that.

So where does the other 20% come from? How does the dealer get paid the other $2,000.00? He's got to make a profit, right?

Well, if you have a trade in that's worth $5,000.00, he may tell you that it's only worth $3,000.00. The difference between the trade in "allowance" and the ACV or "actual cash value" of your car, makes up the difference. He allows you $3,000.00 for your car, when it's really worth $5,000.00 on trade. Make sense? The dealer gets the other 20% that the loan company won't advance on the loan by manipulating the numbers.

That my friend, is something I would have gotten fired over for telling a customer.

You can bypass dealer financing by arranging your auto loan online. There are companies that specialize in helping people with bad credit, get approved for no money down car loans.